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UPDATE: EEOC Releases Proposal Details on Wellness Incentives

UPDATE EEOC Releases Proposal Details on Wellness IncentivesEEOC Seeks to Reconcile ADA & ACA Compliance for Workplace Wellness Plans

Over a week ago we wrote about the EEOC’s proposed new rule to clarify the implementation of workplace wellness plans and mitigate the potential for conflict between the American with Disabilities Act (ADA) and the Affordable Care Act (ACT). Now, the Equal Employment Opportunity Commission has made the proposed rules public.

In its proposed rules, the EEOC suggests that employers can offer incentives—or, conversely, penalties – that amount to no more than 30% of the total cost of an employee-only health plan to participate in their wellness plans. For instance, if an employee is on a family plan that costs $12,000, for example, but the individual plan costs $6,000, the incentives or penalties would max out at $1,800.

A 30% cap already applies to programs that mandate some physical activity or the achievement of specific health outcomes, according to Health Insurance Portability and Accountability Act (HIPAA) rules. Now, the EEOC’s proposal extends that cap to so-called participation-only wellness programs that ask only for an employee’s participation in, for example, completing a health questionnaire or undergoing biometric screening.

The EEOC’s proposal in more written detail includes the following:

  • A wellness program, including any disability-related inquiries and medical examinations that are part of such a program, must be reasonably designed to promote health or prevent disease. To meet this standard, the program must have “a reasonable chance of improving the health of, or preventing disease in, participating employees, and must not be overly burdensome, a subterfuge for violating the ADA or other laws prohibiting employment discrimination, or highly suspect in the method chosen to promote health or prevent disease.”
  • In order for the wellness program to truly be voluntary an employer cannot require an employee to participate in such a program and may not deny coverage under any of its group health plans or particular benefits packages within a group health plan, generally may not limit the extent of such coverage, and may not take any other adverse action against employees who refuse to participate in an employee health program or fail to achieve certain health outcomes.
  • If the wellness program is part of a group health plan, the employer must provide a notice clearly explaining what medical information will be obtained, how the medical information will be used, who will receive the medical information, the restrictions on its disclosure, and the methods the covered entity uses to prevent improper disclosure of medical information.
  • Offering limited incentives to participate in a wellness program that is part of a group health plan and includes disability-related questions or examinations does not render a program involuntary, provided the total allowable incentive available under all programs does not exceed 30 percent of the total cost of employee-only coverage, which generally is the maximum allowable incentive available under HIPAA and the Affordable Care Act for health-contingent wellness programs.
  • The medical information collected through an employee health program may only be provided to a covered entity under the ADA in aggregate terms that do not disclose, or are not reasonably likely to disclose, the identity of specific individuals, except as needed to administer the health plan and for other limited purposes described in the regulations.

The EEOC is inviting interested parties to provide input on this proposal with a deadline of June 19, after which it will issue its final regulation. Axis Insurance Services will keep you updated on the final ruling once it is issued. As providers of Employment Practices Liability insurance (EPLI), this is an important topic as businesses can find themselves in violation of the ADA and facing a discrimination lawsuit because of wellness plan they believed to be in compliance. As we previously discussed, lawsuits have already been filed, which is why the EEOC has been asked to clarify the issue.

For more information about our EPLI programs, contact us at 877.787.5258.

Sources: EEOC, Wall Street Journal, Littler Employment & Labor Law Solutions

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Blogged on: April 24, 2015 by Mike Smith
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